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Mon 19 Apr 2010 10:32 AM

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UAE's 'build it and they will buy' days are over

Real estate industry experts say developers must match units to consumer demand.

UAE's 'build it and they will buy' days are over

Developers in the UAE are being warned to pay closer attention to consumer demand if they hope to sell or rent off the space in the multitude of new projects coming online in the country, senior industry observers say.

"Developers have been building 'outside in' - that is, for the look of the property rather than the efficient use of the interior floorspace," Cluttons Abu Dhabi associate director Harry Goodson Wickes told Arabian Business during the Cityscape Abu Dhabi exhibition.

"This was all fine when supply is limited and demand is high, but as more discerning occupiers look at the new supply line in the market, they will be attracted by more functional usage."

The Cluttons director added that if a building has been built more efficiently, the service charge is likely to be lower, which is again an attractive proposition for occupiers.

"What we are saying to developers is that you need to cut up your floorplate to match demand in the market," Colliers International regional director Ian Albert pointed out.

"You have to provide a service and a product that people want; it's no longer a 'build and they will take it' market."

Albert indicated that the abundance of shell and core office space available to consumers was fine in a cash-rich market, but that occupiers were now looking to save the money they would once have spent on fitting out.

"The advice to clients is that it's better to take the cost of fit-out and put it into the building itself, as the finance loan for that building is over ten-fifteen years and is a lot easier to swallow," Albert said.

For their part, developers argued that they were listening to the new market dynamic.

"Things are changing - people don't just want three or four bedroom properties, they want one or two bedrooms maybe," said Aldar marketing director Ousama Ghannoum.

"We are definitely listening to demand."

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RBH 10 years ago

1. Lower rent 2. Lower rent 3. and, oh yes, lower rent! Only then people will start renting the developers' properties in UAE. Now, as the petroleum prices will start to increase, the rents will even go higher. My advice to all developers: stop developing any new properties. Utilize the ones you already have and sell them at more reasonable prices. Just think how much people would benefit if they're moving from Sharjah or Ahman to Dubai or Abu Dhabi; think big but keep your feet on the ground!

hARRY WINSTON 10 years ago

There is no need to build any new buildings for the next 10 years. However these developers , especially government backed ones insist on building more and more , so as to retain their jobs in the global downturn. Once they loose their job they have no safety net to fall back on. So they create a perception of false demand and build some more and renew their contracts. Thats the way the game is being played right now.

Mick 10 years ago

I have been searching for two months for a decent 1 bdrm for in the area of SZR between business bay and World Trade and it seems that there are none around or there is a hitch with 1 cheque or huge agency fees and security deposits.....so many empty buildings and they are sitting and costing tons of money (many with lights on for months and months) with complete vacancy or, at least, mostly vacant while I search for a reasonable deal for a reasonable place. They would rather keep them mostly vacant for a year or more instead of take 60K for a 1 bdrm. The law of diminishing marginal utitility is completely unknown in Dubai. Start taking more cheques for a yearly rental and lower the prices or end up with nothing.